December 11, 2003

Unemployment Insurance Claims Rise

*Sigh*. Worse news than I expected:

Jobless claims up to 378,000 in latest week - Dec. 11, 2003: The Labor Department said 378,000 people filed new claims for unemployment benefits in the week ended Dec. 6, compared with a revised reading of 365,000 in the prior week. Economists, on average, expected 359,000 new claims, according to Briefing.com.... The four-week moving average of new claims, which irons out the volatility of the weekly data, rose to 364,750 last week from a revised 362,500 in the prior week...

Oh, and more seriously, the insured unemployed rate held steady at 2.6%. The weekly measure has been pretty consistent in forecasting changes to the monthly jobless rate this year. While the new and continuing claims series seem to have lost their downward momentum (didn't you kinda figure?), the jobless rate doesn't seem likely to rise in the December jobs report. That's not good news, just the absence of bad news.

From what people were saying on previous threads, there should be an upwards revision, since each week's number reflects the total number of claims tabulated. Therefore, the revised number will reflect the claims mentioned previously, plus some more which took an extra week to get into the system.

There was an article on a UCLA study of the Bay Area economy today (12/11) in www.sfgate.com that really nailed the effect of outsourcing as the most important contributor to the jobloss recovery locally.

I think the projections in this study understate the drag on the job market from outsourcing over time because they do not take into account how outsourcing will continue to accelerate.

>>>>But the most important explanation for slow job growth involves changing patterns of corporate hiring, especially in technology, the sector that dominates the Bay Area economy.

Technology hardware and software companies are already experiencing a rebound in demand for their products. But when companies add to their workforces to meet rising demand, they often hire in India or China rather than California.

In Silicon Valley, "hiring is going to be selective, it's going to be limited and we are going to continue to see layoffs," Los Gatos career counselor Patti Wilson said. <<<<

Don't get too worked about a one-week figure that requires a huge assumed seasonal adjustment. The week following Thanksgiving typically sees a big jump in the raw (unadjusted)number of claims as the benefits offices return to a full workweek. This time, for example, the actual number of claims jumped by 37% to 490,000 from 357,000 the prior week. That change is then run through the seasonal adjustment model, which guesses that the jump was 13,000 above the seaosonal norm for that week. Given that Thanksgiving moves around in the calendar (in terms of its date in Nov), the adjustment process is by neccessity a rough one. A better guide is the four week average, which essntailly has held steady near 360K for the past three weeks.